With years of protests and bureaucratic discussion, a working group on ‘Ethical Investment’, and a recent series of Town Hall meetings, one might be forgiven for wondering how a decision on divestment still hasn’t been made. Eleanor Salter, Co-President of Cambridge Zero Carbon, is hopeful that the current working group, focused on fossil fuel divestment specifically, is “pretty much the last working group the University can formulate”. If this is the end of the University’s red tape, it’s worth wondering whether divestment is inevitable.

The aim of divestment is “politicising the environment, and not seeing it as a separate realm to that of our economic and political systems”, as Angus Satow, Cambridge Zero Carbon’s Press Officer and co-founder describes it. Divestment – which comes from the phrase “diverting investment” – should build stigma around the fossil fuel industry, and emulate the successful movement against investment in South Africa which brought the apartheid regime to its knees. However, underneath the murky surface of the divestment debate at Cambridge, there also lie unanswered questions about transparency and how much the university owes to its members.

“Only 4% of Cambridge’s investments are direct, with the overwhelming majority being indirectly invested through fund managers”

The Paradise Papers were a slap in the face for students at Cambridge interested in divestment. Despite the Investment Office’s claims to have “negligible” investments in the fossil fuel industry, Cambridge had millions in offshore investment, including a £1.3 million investment joint with Oxford, in a fund whose largest investment was looking into new sources of deep-sea oil drilling. The loophole? Only 4% of Cambridge’s investments are direct, with the overwhelming majority being indirectly invested through fund managers. Angus Satow says this underlies the University’s “semi-disingenuous” denial of their fossil fuel investments before the Paradise Papers. According to a new 49-page Decarbonise Cambridge report, produced by three student societies including Zero Carbon, there are plenty of examples of investors influencing fund managers to divest on their behalf. They argue that indirect investment is not a valid excuse to mislead the student body, or to invest in fossil fuel industries at all. 

The University’s investment team holds ‘fiduciary duty’ very close to its heart. As the guiding principle for any group which invests on behalf of an institution, it emphasises maximising the financial return on the resources, while balancing the ethical considerations of its stakeholders. These ethical considerations include investing in line with the mission statement of the University, which notably includes “concern for sustainability and the relationship with the environment”. Furthermore, the democratic bodies of the university have already spoken – with both CUSU Council and Regent House voting unanimously in favour of divestment, making the ethical stance of both students and staff clear. Whilst the Investment Board currently incorporates ESG (Environmental Social Governance) factors into its investment decisions, they are still allowed to invest in fossil fuel industries.

“One-third of UK universities have already divested in some capacity”

Within fiduciary duty, transparency is also important. I spoke with Umang Khandelwal, a student member of both the Divestment working group and the University Council, who says significant progress has already been made on this front:

“A successful outcome for the working group would be to make concrete recommendations to the University regarding the question of divestment and along with that, investment processes that can facilitate the former. Another important measure of success of the working group would be widespread stakeholder engagement and consultation. On this front, the working group has had commendable success already – two well-attended Town Halls with diverse statements from students, academics and staff, written evidence submitted to the working group and oral evidence sessions from internal members of the University as well as related external stakeholders.”

While some might see the Divestment working group as kicking the can down the road, Alice Guillaume, Zero Carbon’s student representative on the Divestment working group, thinks otherwise. She says that internal pressure was the main prompt for the formation of the group in the first place, and reflects at least a minimal effort by the University to engage with its stakeholders.

“It seems the tide really is turning against fossil fuel investments”

While greater involvement by students and staff in discussions around divestment is undoubtedly a good thing, at present there is a huge hole where information about university investments should be. This makes it much harder to have an informed opinion on the issue, and for students and staff to contribute evidence to the working group in the first place. Nick Cavalla, the Chief Investment Officer of the Cambridge Investment Office, says that Cambridge is willing to share as much information about its investments as its peers, including US universities and charities like the Wellcome Trust. Unlike its peers, the Cambridge Investment Office has limited information online, and he admits that this is a problem which needs solving. He hopes the next step will be inclusion of all non-sensitive policy documents on the Investment Office website, insisting: “The information is not being withheld, it’s just hard to access.”

Given the growing momentum of the global divestment movement, it seems increasingly likely that Cambridge’s fossil fuel investments will be overturned. One-third of UK universities have already divested in some capacity, and some trailblazers such as Glasgow University have divested all of their financial assets. Organisations with an endowment fund far outweighing Cambridge’s, such as the New York City Pension Fund with US$160 billion in its pocket, are currently beginning divestment proceedings. Pressure from within Cambridge has also ramped up, with local politicians such as Daniel Zeichner and Julian Huppert showing support, as well as college-based divestment campaigns such as at Trinity College, targeting its approx. £1 billion endowment fund. There are also purely financial reasons to withdraw fossil fuel investments. The Governor of the Bank of England, Mark Carney, has warned of the financial risk posed by investing in fossil fuels, as they may become “stranded assets” – as the industry’s influence decreases, and has the potential to form a “carbon bubble” in the next couple of decades. It seems the tide really is turning against fossil fuel investments.

The Decarbonise Cambridge report, recently submitted as evidence to the Divestment working group, sets out three pathways towards divestment, along with successful examples of their implementation. The first two pathways – a fossil-free fund manager and a low-carbon index – would be the most immediate and effective, as they would be part of a five-year transition plan. The third option – pressure on current fund managers – would take a more gradualistic approach. Regardless of the timescale, Alice Guillaume hopes that, ­“at the very least, I want the working group’s report to show that Cambridge is committed to taking substantial action to bring about a fossil-free, zero carbon future, and a recognition that ‘business as usual’ is not a financially, intellectually, or morally viable option”. Let’s hope it’s also a step towards clearing those muddy waters, and moving towards a more transparent university